Reassessment jurisdiction cannot support a new disallowance unrelated to the recorded reasons for reopening.

In reassessment proceedings, an addition cannot be sustained on a ground not covered by the recorded reasons for reopening. Here, the notice under section 148 was based on alleged escapement of interest income from inter-corporate deposits, but no addition was made on that basis; the only sustained disallowance related to loan processing fees. As the recorded reasons did not include that issue and no fresh valid notice or recorded satisfaction supported it, the reassessment could not extend to an entirely different item. The addition was deleted and the reassessment was held unsustainable on that basis.

---

---

Issues: Whether the reassessment could sustain an addition on loan processing fees when the notice under section 148 was issued on the basis of alleged escapement of interest income from inter-corporate deposits.

Analysis: The reassessment was initiated on the recorded reason that interest income of Rs. 19,75,09,145/- had escaped assessment. No addition was ultimately made on that ground. The only addition sustained was disallowance of Rs. 5,75,00,000/- towards loan processing fees. The recorded reasons did not cover that issue, and no separate notice or recorded satisfaction existed for that addition. In such circumstances, the reassessment could not be used to assess an entirely different item of income or disallowance.

Conclusion: The addition towards loan processing fees was deleted as beyond the scope of the reasons recorded for reopening, and the reassessment could not survive on that basis.

Final Conclusion: The appeal was allowed and the impugned addition was set aside on the ground that reassessment jurisdiction cannot be extended to a matter not forming part of the recorded reasons.

Ratio Decidendi: In reassessment proceedings, if the income originally believed to have escaped assessment is not ultimately brought to tax, the Assessing Officer cannot independently sustain a different addition unless that issue was also part of the recorded reasons or is supported by a fresh valid notice.

---